The president of a servicer has been charged with stealing nearly $3 million from loans included in mortgage-backed securities guaranteed by the Government National Mortgage Association.
Mortgage Security Inc. was an issuer of Ginnie Mae MBS. After the securities were issued, the Falmouth, Massachusetts-based organization handled the servicing for the residential loans.
Loans contained in Ginnie Mae MBS include mortgages insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs and Department of Agriculture.
According to an announcement from the U.S. Attorney’s Office for the District of Massachusetts,
Mortgage Security’s owner and president, Robert Pena, is accused of defrauding Ginnie out of nearly $3 million.
Pena, 67, allegedly began diverting loan payments from the securitized loans in 2011.
He also allegedly diverted borrowers’ escrow funds and mortgage-insurance premiums.
“Specifically, he is alleged to have deposited large-dollar, loan-payoff checks into secret accounts unknown to Ginnie Mae and then using those funds for his own personal and business uses,” the Department of Justice announcement states.
Nearly $3 million was allegedly diverted.
As a result, government-owned Ginnie had to pay MBS investors.
Pena is accused of covering up the scheme by providing Washington-based Ginnie with bogus reports about the status of the loans being serviced.
He was charged in an indictment with conspiracy and wire fraud and arrested on Thursday.
In 2013, the Massachusetts
Commissioner of Banks determined that Mortgage Security had been servicing loans in the state without maintaining a required license. The company had been utilizing a sub-servicer until July 2012, at which point it began servicing the loans itself.
In April 2013, a cease-and-desist order was issued by the state against Mortgage Security and Pena.
The Justice Department announcement indicates that Mortgage Security is now defunct.
Pena faces up to 20 years in prison on the federal charges. He is scheduled to appear before U.S. District Court Magistrate Judge Marianne B. Bowler this afternoon.
